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IRS still using Social Security numbers too much

The IRS is making only the slowest of strides when it comes to removing Social Security numbers from official documents, according to a new report from the agency's watchdog.

Treasury's inspector general for tax administration found the IRS had removed Social Security numbers from just 58 of the 2,749 kinds of letters it sends – a rate of just two percent.

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The agency has done much better on notices, removing Social Security numbers on almost half (93 of 195).

“A person’s Social Security Number is the most valuable piece of personal data identity thieves can obtain," Russell George, the tax administration inspector general, said in a statement. “The fact that the IRS does not have processes and procedures to accurately identify all correspondence that contain Social Security Numbers remains a concern.”

The IRS has had some struggles in recent years in protecting sensitive taxpayer data, having acknowledged this year that hundreds of thousands of taxpayers using an online transcript service saw their information compromised. The agency has also for years said that battling identity theft is one of its top priorities.

In all, the IRS sent out 141 million notices and 37 million letters last year. The Obama administration required the IRS in 2009 to roll back the unnecessary use of Social Security numbers. The agency stopped some work on that effort in 2011, citing funding issues, before picking it back up in 2013.

The IRS agreed with three of the four recommendations from the inspector general, including to put more specific time frames in place for removing Social Security numbers from official documents. But the agency thought a suggestion that the IRS cobble together a list of all the correspondence it sends out went too far.

"Given our limited resources in these tough budget times, we believe addressing correspondence known to have the highest volume is a better use of taxpayer money," the agency's Mary Howard wrote in response to the new audit.